Gold Technical Update

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XAU/USD Daily Chart 9:10PM EDT 7/12/2012

gold 7/25/2012 Daily chart

Gold continues to trade in a triangle, congestion pattern, making high lows, and lower highs as seen in the daily chart. Note the RSI stuck between 40 and 60 and sign of a directionless market. You can say that entering the triangle the market was bearish, and since the RSI has not broken above 60, the the bearish momentum in the daily time-frame is still on.

Jumping down to the 1H chart we see a market that is bullish in the near-term as price action rallies sharply away from where the moving averages were clustered. The clustering reflected a flat market, so the bullish attempt is one swing (not part of a trend).

The RSI pushed above 70 which introduces some near-term bullish momentum, but again the RSI was below 30 on 7/23, and therefore there is no sign yet that this bull run is sustainable.

The upper bollinger band (parameter: 3 std deviations from the 200SMA) is being tagged. This is a sign that the market is overbought in the near-term as well.

If the market slowly marks a higher high, let's say near 1610, but the RSI high is lower, and the price stays within the bollinger band, we would get a clue that the rally is exhausting.

A strong push above 1610 would be suggesting AGAINST the consolidation idea posed here, especially since it breaks above the triangle resistance. This exposes the 200-Day SMA near 1654, as well as another declining trendline near 1670.

XAU/USD 1H Chart 9:15PM EDT 7/25/2012

gold 7/25/2012 1H chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.